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AccountingStandards In India
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Presented By-
MohammedDanish Shaikh (M-4155)
Farhan Khan (M-4161)
Sania Shaikh (M-4139)
Prutha Jagtap (M-3015)
Vikita Shah (M-4138)
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Introduction
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Objectives
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AccountingStandard (AS)11
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Definition Of AS-11The following terms are used in this statements: Reporting Currency.
Foreign Currency.
Exchange Rate.
Average Rate.
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Contd Closing Rate.
Monetary Items.
Non-Monetary Items.
Settlement Date.
Recoverable Amount.
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Objective Of AS-11
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Scope Of AS-11This statement should applied by n enterprise;
(a) In accounting for transaction in foreign currencies;and
(a) In translating financial statement of foreignbranches for inclusion in the financial statements ofthe enterprise.
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Accounting
Standard (AS)17
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INTRODUCTIONAlso known as Segment Reporting.
Issued by the Council of the Instituteof Chartered Accountants of India.
Commencing on or after 1.4.2001.
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DEFINATION :REPORTABLE SEGMENTS :
An enterprise may be engaged in N
Number of products /areas .but only some of thesegments need to be compulsorily disclosed in thefinancial statements. Such mandatory disclosedsegments are known as reportable segment.
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Some example of
segmental disclosure :Name ofcompanies
industry segments
AXIS BANK Banking Treasury
Corporate andRetail banking,others
Tata chemical Ltd Fertilizers and
chemical
Inorganic chemical
fertilizer
Dabur India Ltd Pharmacy FMCG, AyurvedicProducts, others
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Objectives :
To inform about the different types of products andservices of an enterprise and,
To inform financial condition of different geographical areas inwhich it operates.
To better understand the performance of the enterprise.
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Benefit to users :
Better understanding of the performance of theenterprise;
Assess the risks and returns of the enterprise.
Make more informed judgments about the enterprise
as a whole.
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Accounting Standard(AS) 22
Accounting for Taxes on Income
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CONCEPT
Accounting Standard (AS) 22, Accountingfor Taxes on Income, issued by the Council ofthe Institute of Chartered Accountants of
India, comes into effect in respect of All thecompanies commencing on or after 1-4-2001.
Income Tax Charge shall Match the IncomesDisclosed in Books of Accounts Irrespective ofTime When It is Payable As Per Income TaxLaws
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OBJECTIVES
Prescribe accounting treatment for taxes onincome.
Differentiate taxable income from accounting
income.
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SCOPE
This Statement should be applied in accountingfor taxes on income. This includes thedetermination of the amount of the expense or
saving related to taxes on income in respect of an
accounting period and the disclosure of such anamount in the financial statements.
For the purposes of this Statement, taxes on
income include all domestic and foreign taxeswhich are based on taxable income.
This Statement does not specify when, or how,an enter rise should account for taxes that are
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IMPOARTANT RELATED
CONCEPTSAccounting income is the net profit or loss for
a period, as reported in the statement of profit
and loss, before deducting income tax expenseor adding income tax saving.
Taxable income is the amount of the income
for a period, determined in accordance with thetax laws, based upon which income tax payable
(recoverable) is determined.
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CONTD.
Timing differences are the differences betweentaxable income and accounting income for aperiod that originate in one period and are
capable of reversal in one or more subsequent
periods.
Permanent differences are the differences
between taxable income and accounting income
for a period that originate in one period and donot reverse subsequently.
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Tax expense is the aggregate of current tax and
deferred tax charged or credited to the statementof profit and loss for the period. Tax expense may
result into tax saving as well
Current tax is the amount of income taxdetermined to be payable (recoverable) in respect
of the taxable income for a period.
Deferred tax ,means a future tax liability or asset,
resulting from temporary differences or timingdifferences between the accounting value of assets
and liabilities and their value for tax purposes.
CONTD.
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CURRENT TAX ASSETS ANDLIABILITIES
Current tax for the current and prior periods
should be recognized as a liability to the extent
that it has not yet been settled, and as an asset
to the extent that the amounts already paidexceed the amount due.
The benefit of a tax loss which can be carried backto recover current tax of a prior period should berecognized as an asset.
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DEFFERED TAX ASSETS ANLIABILITIES
There may be difference how certain items ofexpenditure are treated for tax purposes and how
a company actually treats them in its accounts.
This gives rise to Deffered Tax Asset and Libility.
It is the result of Timing Differences. Permanent
differences do not result in deferred tax assets ordeferred tax liabilities.
Deductable Temporary difference give rise to
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In other words
Accounting income > taxable income=deffered tax
liability.
Taxable income > accounting income=Deffered tax
asset
Deffered Tax asset(Debit) and Deffered tax
Liability(Credit)
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MEASUREMENT
Current tax should be measured at theamount expected to be paid to (recoveredfrom) the taxation authorities, using the
applicable tax rates and tax laws.
Deferred tax assets and liabilities should be
measured using the tax rates and tax lawsthat have been enacted or substantivelyenacted by the balance sheet date.
P t ti d
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Presentation and
DisclosureAn enterprise should offset current tax assetsand current tax liabilities if the enterprise:
(a)has a legally enforceable right to set off the recognized
amounts; and(b)intends to settle the asset and the liability on a net
basis.
( )An enterprise should offset deferred tax assetsand deferred tax liabilities if:
(a)the enterprise has a legally enforceable right to set off
assets against liabilities representing current tax; and
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Accounting
Standard (AS)30
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OBJECTIVE
Main objective is to establish principles forrecognising and measuring financial
instruments whose definition encompass mostitems of financial assets, financial liabilities in
an entity's balance sheet.
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APPLICATION
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DEFINITION
A financial instrument is any contract thatgive rise to both:
(a) a financial assets of one entity and
(b) a financial liability or equity instrument ofanother
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DERIVATIVES
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EMBEDDED DERIVATIVE
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CLASSIFICATION OF
FINANCIAL INSTRUMENT
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RECOGNITION AND DERECOGNITION
Initial Recognition
Derecognition of financial Assets
Derecognition of financial Liability
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MEASUREMENTS
Fair value
Measured at original invoice amount
Measured at amortised cost
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Accounting Standard
(AS)31&32
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INTRODUCTIONAccounting Standard (AS) 31 and 32,
Financial Instruments: Presentation and
Disclosure, issued by the Council of the
Institute of Chartered Accountants of India,comes into effect in respect of accounting
periods commencing on or after 1-4-2009 andwill be recommendatory in nature for an initial
period of two years.
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This Accounting Standard will become
mandatory in respect of accounting periods
commencing on or after 1-4-2011 for all
commercial, industrial and business entitiesexcept to a Small and Medium-sized Entity, as
defined ahead.
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ENTITIES
Whose equity or debt securities are not listed
or are not in the process of listing on any
stock exchange, whether in India or outside
India;
Which is not a bank (including co-operative
bank), financial institution or any entitycarrying on insurance business;
whose turnover (excluding other income)
does not exceed rupees fifty crore in
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PRINCIPLE:AS 31
The principles in this Standard complement
the principles for recognizing and measuring
financial assets and financial liabilities in
Accounting Standard (AS) 30, FinancialInstruments: Recognition and Measurement
and for disclosing information about them inAccounting Standard (AS) 32, Financial
Instruments: Disclosures.
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DEFINATIONS
The following terms are used in this Standard
with the meanings specified:
A financial instrument is any contract thatgives rise to a financial asset of one entity
and a financial liability or equity instrument of
another entity.
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An equity instrument is any contract thatevidences a residual interest in the assets of
an entity after deducting all of its liabilities.
Fair value is the amount for which an asset
could be exchanged, or a liability settled,
between knowledgeable, willing parties in anarms length transaction.
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OBJECTIVES:AS 32
The objective is to provide disclosures on:
The significance of financial instruments for
the entity.
The nature and extent of risks arising fromfinancial instruments to which the entity is
exposed.
Both qualitative and quantitative disclosuresare required.
Nature and extent of
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Nature and extent of
risk arising from
financial instrumentQualitative disclosures:
For each type of risk arising from financial
instruments disclose:The exposures and how they were generated
Objectives, policies and processes formanaging the risks and methods to measure
the risk.
Any changes to the above from the previousperiod
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Quantitative disclosures:
For each risk arising from financialinstruments, disclose:
Quantitative data about the risk exposure asprovided to key management personnel.
Detailed disclosures to the extent notdisclosed already from the point above.
If the year-end disclosures areunrepresentative for the year, disclose
additional information that is representative
Q antitati e
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Quantitative
disclosuresCredit risk
Maximum credit exposure, description of
collateral, information about credit quality.
Analysis of financial assets past due andimpaired.
Collateral and credit enhancements obtained.
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Liquidity risk:Maturity analysis of financial liabilities
showing remaining contractual maturities
Description of how liquidity risk is disclosed
Expected maturities can also be disclosed if
different from contractual maturities (e.g.demand deposits).
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CONCLUSION
q The basic purpose of accounting standards is
to facilitate the provision of financialinformation about entities to enable investors,
analysts, creditors and the entitiesthemselves to make informed decisions about
the allocation of resources.
q Accounting standards are essentially aboutdisclosure and, in many respects, are at the
heart of market efficiency.
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